Asian stocks may rise on upbeat earnings

MomingZhou

SAN FRANCISCO (MarketWatch) -- Asian markets, led by Japan, are expected to rise Tuesday, helped by upbeat earnings reports and the rally in the U.S. stock market.

Nikkei 225 Stock Average futures expiring in September last traded at 17,310 on Chicago Mercantile Exchange. The futures were up from Monday's close of 17,300 in Osaka Stock Exchange and 17,135 in Singapore Exchange, suggesting a strong start for their underlying index on Tuesday.

Shares of Kyocera Corp., Olympus Corp., and Bridgestone Corp. may rise. Japan's Nikkei News reported the companies announced strong earnings after market closed on Monday. Shares of Australian property developers may fall. The Australian Newspaper reported a survey showed sales of new homes in Australia fell.

The Nikkei 225 (1804610) closed up slightly to 17,289.3 on Monday in Tokyo, its first advance in four days. The broader Topix index (1804609), which tracks shares of over 1,700 large-cap domestic companies, gained 0.4% at 1705.71, with roughly two stocks advanced for every one that declined.

The Bank of New York Asia ADR Index, which tracks Asia's American Depositary Receipts, rose 1.9% to 167.96. The Japan ADR Index advanced 1.3%.

Good earnings

"Company earnings are pretty good, that's exactly what people should look at," said Taizo Ishida, portfolio manager of Matthews International Capital Management, which has $277.3 million investment in Japan. "The earnings reports should support the market."

Kyocera (6971),
KYO, +0.51%
the Kyoto-based manufacturer of electronic parts and equipment, said Monday after the market closed that its group net profit rose 25% in the April-June quarter, citing strong sales of color copiers and improvement in its mobile telephone handset business.

Olympus (7733)
OCPNY, +1.17%
the Tokyo-based camera manufacturer, said its net profit more than doubled in the April-June quarter, due to strong sales of digital cameras and growth in the medical equipment business.

Bridgestone (5108)
BRDCY, +0.00%
the world's biggest producer of tires, announced it lifted its parent earnings forecasts for the first half and the full year on stronger tire sales and a weaker yen.

In Australia, the Housing Industry Association's survey of Australia's 100 biggest residential developers showed sales of new homes fell 12% during the 2006-07 financial year. Australand Property Group, Australia's fourth-biggest property developer, said there was no foreseeable turnaround in the sluggish housing market.

China bank reserves

In China, the People's Bank of China said Monday that lenders must put aside 12% of deposits as reserves, starting Aug. 15, up from 11.5%. It's the sixth time this year that the central bank raised reserve requirement to control inflation and cool the fast-growing economy.

But some fund managers pointed out the new order will have little impact on the country's stock markets.

"Even with the increased reserve rates, there is so much money in individual hands," said William J. Nobrega, president of Conrad Group Inc., a fund management company with investment in China and India. "China has too much liquidity, with too much money chasing too few assets."

On Wall Street, U.S. stocks closed with solid gains after choppy action that had investors brushing aside worries about tightening credit to focus on corporate profit prospects. See Market Snapshot

The gold futures closed $4 an ounce higher, ending a three-session losing streak that has subtracted nearly $25 an ounce from the benchmark contract, and crude-oil futures closed with a modest loss. See Metals Stocks See Futures Movers

Stocks to watch

NEC Electronics Corp. (6723)
NIPNY
said that it posted a consolidated operating loss of 2.2 billion yen for the April-June quarter, improving on the 5.8 billion yen loss it incurred in the same period last year.

Sumitomo Realty & Development Co. (8830) is expected to report a group pretax profit of around 51 billion yen for the three months ended June 30, up 50% on the year, buoyed by sales of high-margin large condominiums in urban areas.

Sumitomo Corp. (8053) said its group net profit fell 3.2% for the April-June quarter, hit by valuation losses related to its investment activities in a metals project in Bolivia.

Japanese truck maker Isuzu Motors Ltd. (7202)
ISUZY, +0.08%
reported a 14% rise in group net profit to a record for the April-June quarter as overseas truck sales grew in value terms.

Osaka-based electronics maker Sanyo Electric Co. (6764)
SANYY
said Monday it swung into the black in the April-June period, partly due to proceeds from the sale of its leasing and credit service affiliate.

Nippon Paper Group Inc. (3893) said its net profit in April-June slid 48% as cost-cutting wasn't able to offset the impact of higher energy prices.

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